CHAPTER 5
FEDERAL
FINANCE AND FIANCE COMMISSION
Federal Finance
5.1 Our Constitution lays down that India shall
be a Union of States. A large number of economic, social and developmental
functions and responsibilities have been assigned to the States by the
Constitution keeping in view that they require local supervision and nearness
of the governing authority. However, in regard to resources the Constitution
has assigned the power of taxation either to Union or to the States
whichever is in the best position to
levy and collect it thereby attempting to avoid overlapping of tax
jurisdiction.
Provisions in
the Constitution
5.2 Provisions exist in the Constitution for
assignment/distribution of resources to the States.
Art.268: Stamp duties and duties of excise on medical and toilet preparations mentioned in the Union list, though levied by the Government of India, are collected and retained by the States.
Art. 269: The net proceeds of the following duties and taxes though levied and collected by the Government of India, are entirely assigned to the States and distributed among them in accordance with the principles of distribution formulated by Parliament.
Art.268: Stamp duties and duties of excise on medical and toilet preparations mentioned in the Union list, though levied by the Government of India, are collected and retained by the States.
Art. 269: The net proceeds of the following duties and taxes though levied and collected by the Government of India, are entirely assigned to the States and distributed among them in accordance with the principles of distribution formulated by Parliament.
(a) duties in respect of succession to property
other than agricultural land;
(b) estate duty in respect of property other
than agricultural land;
(c) terminal taxes on goods or passengers
carried by railway, sea or air;
(d) taxes on railway fares and freights;
(e) taxes other than stamp duties on
transactions in stock-exchanges and futures markets;
(f) taxes on the sale or purchase of news papers
and on advertisements published therein;
(g) taxes on the sale or purchase of goods other
than newspapers, where such sale or purchase take place in the course of
inter-State trade or Commerce;
(h) taxes on the consignment of goods where such
consignments take place in the course of inter-State or commerce.
Art. 270: A percentage of the net proceeds of income tax is assigned to the States. The proceeds thus assigned to the States do not form part of the Consolidated Fund of India.
Art. 270: A percentage of the net proceeds of income tax is assigned to the States. The proceeds thus assigned to the States do not form part of the Consolidated Fund of India.
Art.
272: Union excise duties can be shared
with the States if Parliament so decides. Almost from the commencement of the
Constitution, excise duties have been so shared.
Art.275: Grants-in-aid of revenues shall be paid out
of the Consolidated Fund of India to the States which may be in need of
assistance. Different sums can be fixed for different States.
None of
these Articles mention what amounts are to be so given to the States or lays
down the principles according to which they are to be distributed among the
States. This task has been left to the finance Commission to be constituted by
the President under Article 280 at the expiration of every fifth year or such
earlier time as he considers necessary.
ഈ ആര്‍ട്ടിക്കിളുകളിലൊന്നും സംസ്ഥാനങ്ങൾക്ക് നൽകേണ്ട തുകയെക്കുറിച്ച് പരാമർശിക്കുകയോ അവ സംസ്ഥാനങ്ങൾക്കിടയിൽ വിതരണം ചെയ്യേണ്ട തത്വങ്ങൾ വ്യക്തമാക്കുകയോ ചെയ്യുന്നില്ല. ആർട്ടിക്കിൾ 280 പ്രകാരം ഓരോ അഞ്ചാം വർഷവും കാലഹരണപ്പെടുമ്പോഴോ അല്ലെങ്കിൽ ആവശ്യമെന്ന് കരുതുന്ന മുൻ‌കാല സമയത്തേക്കോ രാഷ്ട്രപതി രൂപീകരിക്കുന്ന ധനകാര്യ കമ്മീഷന് ഈ ചുമതല നൽകിയിട്ടുണ്ട്.
Duty of the Commission
യൂണിയനും സംസ്ഥാനങ്ങളും തമ്മിലുള്ള ആദായനികുതി വിതരണവും യൂണിയന്റെ എക്സൈസ് തീരുവയും അവയ്ക്കിടയിൽ സംസ്ഥാനങ്ങളുടെ വിഹിതവും അനുവദിക്കുന്നതിനെക്കുറിച്ചും ആർട്ടിക്കിൾ 275 പ്രകാരമുള്ള ഗ്രാന്റുകൾ നിയന്ത്രിക്കേണ്ട തത്വങ്ങളെക്കുറിച്ചും ശുപാർശകൾ നൽകേണ്ടത് ധനകാര്യ കമ്മീഷന്റെ കടമയാണ്.
The President may also refer any other matter to the Commission in the interests of sound finance. Under this last provision, questions like the distribution of additional excise duties, taxes under Article 269 and grant in lieu of the tax on railway passenger fares have been referred to the Finance Commissions in the past. Grants under Article 282 are outside the purview of the Finance Commission. It is under this Article that the government of India gives Plan grants to the States.
Guidelines for the Commission
5.4 In making its recommendations, the
Commission will have regards, among other considerations to:
(i) the resources of the Central Government and
the demands thereon on account of the expenditure on civil administration,
defence and border security, debt servicing and other committed expenditure or
liabilities;
(ii) the existing practice in regard to
determination and distribution of Central assistance for financing State Plans;
(iii) the revenue resources of the State on the
basis of the present levels of taxation and the targets set for the future;
(iv) the requirements on revenue account of the
States to meet the expenditure on administration and other non-plan commitments
or liabilities:
(v) adequate maintenance and upkeep of capital
assets and maintenance of Plans schemes already completed;
(vi) the requirements of States for up gradation
of standards in non-developmental sectors and services, particularly of States
which are backward in general administration, with a view to bringing them to
the levels obtaining or likely to obtain in the more advanced States, and the
manner in which such expenditure could be monitored;
(vii) the scope for better fiscal management and
economy in expenditure consistent with efficiency; and
(viii) the need for ensuring reasonable returns
on investments in irrigation and power projects, transport undertakings,
industrial and commercial enterprises and the like.
1. Which of the following statements relating to stamp duty is NOT true?
(A) Stamp duties are levied by the Government of India
(B) Stamp duties are collected by the States
(C) Stamp duties are retained by the States
(D) Fifty percent of the stamp duties collected by each State are passed over to Central Government